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Sweatshops

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05/06/2004

from Radley Balko, writing for foxnews.com.

It's a story that most Mises.org readers know, that anyone who reads NYT columnist Nicholas Kristof knows, and that anyone who paid attention in an economics class knows: sweatshops are a godsend for the sweatshop worker. 

Unfortunately, of course, there are many among us who do not read Mises Institute publications, who skip over Kristof to read Bob Herbert, and who slept through their economics classes, if they took any at all (consider: one can get a bachelors, masters, and PhD in political science without taking a single economics class. Frightening, no?). There are several takeaway points.

Theory and evidence suggest that sweatshops are far superior to third-world workers' next best options (starvation, prostitution, crime). Moreover, the availability of sweatshop labor drives down production costs and allows us to turn mere "resources" into "goods" with astonishing rapidity. So what is the humanitarian to do, if he wishes to alleviate the plight of the downtrodden masses? The answer is simple: shift the demand curve for the downtrodden masses' labor services.

How does one do this? Again, the answer is simple: think globally and act locally. In other words, put down your "living wage" picket sign and actually go into the Wal-Mart you hate so much. Buy as much sweatshop clothing as you can fit into your car. Convince all your friends to do the same. The evil capitalists will get the signal: "produce more cheap, high-quality goods because it's astonishingly profitable." Translation: build another factory in Bangladesh and hire some people. 

Of course, you're going to have to give them an incentive to work for you instead of somebody else, which means that you will have to...increase wages and improve working conditions. So what does the humanitarian get at the end of the day? He gets better working conditions and higher wages for the allegedly downtrodden masses. And he doesn't even need an "uprising of the proletariat" to do it.

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